Nicholas James Care Homes Ltd v Liberty Homes (Kent) Ltd
Citation:  EWHC 360 (TCC)
An application for Part 24 summary enforcement of an adjudication decision in favour of the claimant (NJCH) was resisted by the defendant (Liberty) on the basis that the adjudicator had threatened to exercise a lien over the decision when demanding the payment of fees. The judge dismissed Liberty’s arguments and allowed the decision to be enforced, providing guidance on what parties should do when they are unhappy with the way an adjudicator requests fees, and when such requests will render a decision unenforceable. After issuing the application for enforcement, NJCH had also obtained an ex parte freezing injunction against Liberty which Liberty had applied to have discharged on the basis of material non-disclosure. The judge held that there had been an innocent non-disclosure and that it was in the interests of justice to continue the injunction.
This case concerned issues arising from an adjudication between the two parties. The adjudicator had delivered a decision in NJCH’s favour on 18 February 2022 and NJCH had applied for Part 24 summary enforcement. NJCH had also obtained an ex parte freezing injunction against Liberty, granted on the basis that Liberty had transferred properties to related companies for no consideration to avoid meeting its liability to NJCH.
Arguments Before the Court
Enforcement – Liberty resisted enforcement, arguing that the adjudicator had implicitly threatened to exercise a lien over the decision. The parties did not dispute that adjudicators are required to give their decisions within the time limits set by the rules of the adjudication, and that the purported exercise of a lien over a decision subject to the payment of fees is unlawful and may render a decision unenforceable. In the present case, the adjudicator’s terms of appointment required fees to be paid in advance, and the adjudicator’s clerk had sent several emails requesting payment. Liberty alleged that these emails constituted unlawful threats to exercise a lien and the decision was accordingly unenforceable.
Disclosure – Liberty also applied for the discharge of the freezing injunction on the basis of deliberate material non-disclosure. They argued that NJCH had failed to disclose the existence and contents of two relevant documents dating from November 2020: an email informing NJCH that a new company related to Liberty had been incorporated; and a search carried out by solicitors investigating potential asset transfers. Liberty sought to argue that the non-disclosure was deliberate and was evidence of unreasonable delay by NJCH in bringing the application. NJCH said that the non-disclosure was inadvertent and did not merit the discharge of the injunction.
Held – Andrew Singer KC
Enforcement – The adjudicator had not purported to exercise a lien over the decision as the clerk’s emails requesting the payment of fees did not ‘cross the line’ into threats to impose a lien. The judge considered the case of Mott MacDonald v London & Regional Properties  EWHC 1055 (TCC), which held that an adjudicator appeared to lack partiality when they made it a condition of their appointment that fees must be paid before a decision was delivered and then appeared to enforce that condition. The judge held that the clerk’s emails in the present case were tenacious and persistent, but that the word lien was never used, nor was there any threat to withhold the decision. Liberty had not raised any objection to the emails at the time, which they could have been expected to do so if they truly considered the emails to be threats. There was nothing wrong with an adjudicator asking for security for fees during an adjudication reference.
Disclosure – The judge held that failure to disclose the solicitor’s search had been material, though not of first importance. The non-disclosure was in any event innocent, rather than a result of any deliberate concealment. He adopted the approach to non-disclosure outlined in Tugashev v Orlov  EWHC 2031 (Comm) – the primary question is whether the effect of the non-disclosure was to materially mislead the court. In the event of a substantial or deliberate failure the starting point is immediate discharge, but generally the court must consider the interests of justice. On the present facts, the judge held that the minor innocent non-disclosure did not outweigh Liberty’s widespread unjustified dealings with their properties, and the injunction was continued.
Alexander Nissen KC acted for the Defendants. A copy of the judgment is available here.